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Home > Regulation > UK Regulation

By Michael Trudeau | Published Jul 10, 2012

FSA support for Diamond withdrawn at ‘shock’ meeting

Bob Diamond, former chief executive of Barclays, resigned after Sir Mervyn King revealed the Financial Services Authority no longer supported him as bank chief executive at a summit meeting last week with the Bank of England governor and senior Barclays executives.

Giving evidence at a Treasury Select Committee hearing today (10 July), Barclays chairman Marcus Agius told MPs that Sir Mervyn called for an urgent evening meeting with Mr Agius and senior Barclays director Michael Rake on Monday 3 July.

Although the meeting also covered what measures Barclays was taking in light of the FSA fines, Mr Agius said Sir Mervyn told him “in no uncertain terms” that Mr Diamond “no longer enjoyed the support of his regulators”.

Mr Diamond stepped down as chief executive of the bank the following day (4 July).

Andrew Tyrie, chairman of the TSC, questioned Mr Agius on Sir Mervyn’s influence over Barclays.

Mr Tyrie said the decision to meet Sir Mervyn on Monday night was “effectively, for a brief while the taking over of Barclays by the Bank of England because you felt the need to clarify the measures to meet his approval”.

Mr Agius said he was “shocked” at the revelation from Sir Mervyn, given that the FSA had not criticised Mr Diamond’s leadership when they levied a record £60m fine, itself part of a larger £290m package of penalties levied by US and UK regulators following a lengthy investigation into manipulation of the London inter-bank offered rate.

However, he had also earlier characterised Barclays’ relationship with the FSA as “strained”.

After the meeting with Sir Mervyn and a “telephonic board meeting” with non-executive directors at which they concluded they had no choice but to allow the chief executive to tender his resignation, Mr Agius and Mr Rake called on Mr Diamond to break the news.

Mr Agius said: “We explained what had happened. He was not in a good place which you can imagine.

“The conversation was not long. He asked for time to talk to his family and we left confident that he would make the right decision.”

Mr Tyrie compared this to putting a loaded revolver in Mr Diamond’s hands.

Earlier at the same TSC session, Mr Agius revealed that Mr Diamond had decided to forego all severance bonuses worth about £20m, taking only his remaining annual salary.

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